Rule Against Perpetuities

In estate planning, the rule against perpetuities is a legal principle that prevents someone from exerting control over the ownership of property for an indefinite period of time. The rule, which varies by state, generally provides that, if there are restrictions associated with the transfer of property after the owner passes away, that property’s interest must vest in the owner no more than 21 years after the death of someone who was alive when the trust was created. 

The rule against perpetuities is intended to prevent properties from being tied up in trusts indefinitely so that it can be transferable and usable by future generations. 

For example, if a person dies and leaves their house in a trust to their grandchild, but stipulates that the grandchild can’t inherit the house until they get married, the grandchild must get married within 21 years of the death of someone who was alive at the time the trust was established. If this event (the grandchild’s marriage) could potentially happen outside of this time frame, the trust terms violate the rule against perpetuities.